Sonic Healthcare Limited · ASX:SHL
Sonic Healthcare — H1 2005 Earnings Presentation
24 slides from Sonic Healthcare's earnings presentation, Feb 22, 2005
Slide 1: Interim Results
Interim Results Half Year to 31 December 2004 Dr Colin Goldschmidt Managing Director 22 February 2005
Slide 2: Sonic Half Year Summary
Sonic Half Year Summary (1 July – 31 Dec 2004) ¾ Excellent first half performance EBITA up 33% Core Net Profit up 24% (net profit up 37%) Core EPS up 21% ¾ Solid start to second half January earnings strong ¾ Full-year guidance upgraded ¾ Sonic operations tracking well Accord integration s
Slide 3: Revenue
Revenue 6 Months ended 6 Months ended Movement 31.12.04 31.12.03 $’000 $’000 % Total Revenue 672,982 509,859 32.0% ¾ Consolidation of Schottdorf business (56%) acquired 29.6.04 ¾ Consolidation of IPN business (72%) acquired 28.8.04 ¾ Endeavour/Accord acquired 26 November ‘04 ¾ Sonic organic volume g
Slide 4: SHL Annual Revenue
SHL Annual Revenue 1,400 1,200 1,000 800 $M 600 400 200 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005(F) Revenue ($M) 33 41 47 58 89 133 147 174 387 628 860 975 1,037 1,355 = Forecast 2005 Revenue
Slide 5: Sonic Revenue Split
Sonic Revenue Split H1, 2004 H1, 2005 Total Revenue $510 million Total Revenue $673 million IPN 4% Radiology Radiology 27% 22% Pathology 73% Pathology 74%
Slide 6: Earnings Growth
Earnings Growth 6 Months ended 6 Months ended Movement 31.12.04 31.12.03 % EBITA ($’000) 124,544 93,545 33.1% Core NPAT ($’000) 68,804 55,345 24.3% NPAT ($’000) 35,303 25,720 37.3% Core EPS (cents) 25.0 20.8 20.5% Cash Generation ($’000) 96,643 81,508 18.6% Core = Before Amortisation of Intangibles
Slide 7: Sonic EBITA Margin Expansion
Sonic EBITA Margin Expansion 20% 19% 18.9% 18% 17.8% 17% 17.0% 16% 15% 14% 2002 2003 2004 FY 2005 margins will be diluted by Schottdorf and IPN
Slide 8: EBITA Margins
EBITA Margins 6 Months ended 6 Months ended 31.12.04 31.12.03 EBITA Margin 18.5%* 18.3% * H1 ’05 margins have been impacted by the acquisition of lower margin businesses (Schottdorf, IPN) ¾ Excluding Schottdorf and IPN, margin growth in excess of 50 basis points, compared with previous corresponding
Slide 9: 2005 Guidance Upgraded
2005 Guidance Upgraded 2004 Actuals Previous 2005 Guidance Upgraded 2005 Guidance $M $M $M Revenue 1,037 1,290 – 1,330 1,340 – 1,370 EBITA 197 235 – 245 245 - 260 Notes ¾ Includes Schottdorf, IPN and Accord acquisitions ¾ Intangibles amortisation $68 million ¾ Assumes no further acquisitions
Slide 10: Balance Sheet Summary
Balance Sheet Summary 31.12.04 30.6.04 31.12.03 Receivables (current) $M 141.7 145.6 98.1 Intangibles (net) $M 1,244.9 1,162.2 1,097.3 Total Interest-bearing Debt $M 726.7 641.3 538.1 Equity $M 857.0 847.8 842.5 Gearing (Net IB Debt / Equity) % 80 74 61 Net Interest-bearing Debt / EBITDA X 2.31 2.62
Slide 11: Senior Debt Refinancing
Senior Debt Refinancing ¾ New $700 million refinancing completed December 2004 ¾ ANZ Bank as lead arranger ¾ Increased headroom ($143.5 million currently) ¾ Lower margins ¾ More flexible covenant structure ¾ No amortisation requirement
Slide 12: Interim Dividend
Interim Dividend 2005 2004 Movement $ $ % Interim Dividend 0.13 0.10 30% ¾ Dividend fully franked at 30% ¾ Record Date 3 March 2005 ¾ Payment Date 17 March 2005 ¾ Dividend Reinvestment Plan remains suspended
Slide 13: Pathology Operations
Pathology Operations ¾ Strong performance in pathology division ¾ Large pathology entities outperforming budgets Douglass Hanly Moir Pathology (New South Wales) Schottdorf Group (Germany) Sullivan Nicolaides Pathology (Queensland) Melbourne Pathology (Victoria) ¾ Margin expansion set to cont
Slide 14: Radiology Operations
Radiology Operations ¾ Radiology division delivering solid results H1 2005 margins up on H1 2004 margins ¾ Large entities outperforming expectations Queensland X-Ray (Queensland) SKG Radiology (Western Australia)
Slide 15: New MRI Licences
New MRI Licences ¾ New MRI licences announced 21 February 2005 21 additional MRI licences awarded 15 of 21 providers will bulk bill all patients 101 licensed MRI units now in Australia ¾ Sonic gains 2 additional licences Greenslopes Private Hospital - QXR Hollywood Private Hospital – SKG
Slide 16: Sonic IT
Sonic IT ¾ Roll-out of Sonic proprietary software (“Apollo”) ongoing ¾ Pathology roll-out Southern.IML Pathology (Wollongong) completed in August 2004 Clinipath (Perth), Clinpath and Douglass Hanly Moir next ¾ Radiology Queensland X-Ray (Queensland), Castlereagh Imaging (Sydney) and IRG Radiol
Slide 17: Accord Acquisition
Accord Acquisition ¾ Sonic acquisition of Accord Pathology completed on 26.11.04 ¾ Two physical mergers successfully completed Accord Pathology (Perth) merged into Sonic’s Clinipath Accord Pathology (Sydney) merged into Sonic’s DHM Pathology ¾ Merger rationalisation benefits flowing immediately
Slide 18: IPN
IPN ¾ Sonic now has 72% interest in IPN ¾ IPN results consolidated into Sonic from 26.8.04 ¾ IPN acquisition of Endeavour Healthcare Completed on 26.11.05 18 Medical Centres acquired (Sydney and Perth) Integration into IPN structure successful Loan of $8 million from Sonic to fund the acquis
Slide 19: UK Pathology
UK Pathology ¾ TDL continues to grow organically in Harley Street market ¾ TDL-Omnilabs-UCLH merger Whitfield Street autolab operating well Rationalisation benefits from mergers ¾ Inter-laboratory referrals with Schottdorf commenced ¾ Sonic Europe group purchasing initiative
Slide 20: NHS Outsourcing - Update
NHS Outsourcing - Update ¾ UK pathology market now estimated at £3-4 billion p.a. ¾ ~15% of this to be spent on outsourced contracts ¾ UK Dept of Health in process of contract structuring Large scale vs small scale contracts Input from major players UK elections in May ¾ Possible additional co
Slide 21: German Pathology
German Pathology ¾ Acquisition of 56% interest in Schottdorf Group Integration into Sonic complete Consolidation into Sonic’s results from 28.6.04 ¾ Schottdorf business tracking above budget Strong revenue and earnings growth ¾ Sharing of “know-how” between Sonic and Schottdorf In depth anal
Slide 22: Sonic Healthcare Global Operations
Sonic Healthcare Global Operations Germany In FY 2005, ~30% of Sonic’s EBITA will be sourced offshore
Slide 23: Sonic Healthcare - Current Status
Sonic Healthcare - Current Status ¾ Company in excellent shape ¾ Record financial results H1 ’05 ¾ Profit upgrade for FY ’05 ¾ Healthy balance sheet ¾ German acquisition outperforming ¾ Major new growth prospects in UK ¾ Ongoing earnings growth from local operations ¾ Expansion opportunities in Euro
Slide 24: SONIC HEALTHCARE
SONIC HEALTHCARE SONIC HEALTHCARE